Illinois Is #1 (For Highest Tax Rates In The Country)
Last week, I'm sure that I brightened your day considerably by pointing out that Illinois residents are lucky enough to be paying the 2nd highest property taxes in the entire country (right behind New Jersey).
So today, I thought I'd one-up last week's post on property taxes by sharing the news about overall tax rates, and how we're number one in a category that no one wants to be number one in.
Every Year, The Average U.S. Household Pays Over $10,000 In Federal Income Taxes
But, as personal-finance website WalletHub points out, while we’re all faced with that same obligation, there is significant difference when it comes to state and local taxes. Taxpayers in the most tax-expensive states (that would be all of us in Illinois) pay three times more than those in the cheapest states.
Here's what WalletHub's number-crunchers looked at to determine which states have the overall highest tax rates:
WalletHub searched for answers by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income.
Since I've Already Told You That Illinois Takes The Crown For Highest Tax Rate, Let's Look At The Numbers
As this year's tax filing deadline approaches (April 18th), you might want to consider that Illinois residents pay the highest overall effective state and local tax rate in the nation, coughing up an average of $9,500 a year, which just happens to be more than 38% above the national average.
Tax Rates in Illinois (1=Lowest; 25=Avg.):
- 51st – Overall Effective State & Local Tax Rate
- 39th – Income Tax
- 50th – Real-Estate Tax
- 1st – Vehicle Property Tax
- 25th – Sales & Excise Taxes
For Midwestern comparison, Wisconsin residents will pay around $8,500 per year, which puts them in 7th place among states with the highest effective state and local tax rates. Iowa is just a tiny bit better off in 8th place with a tax bill of around $8,300.